Wednesday 30th November, 2016
Although I’m in London most weeks, I rarely go on the DLR. Whenever I do, I’m always struck by the immediate change of atmosphere – a sense of space, growth and change. A great location then for this year’s Basware Connect - Growth Through Finance event, held at the Royal Victoria docks in the aptly named Crystal. The event attracts over 150 procurement, finance, treasury and supply chain professionals, both customers, and I'm sure Basware would hope, soon to be customers, to a day of trend talks, hands on solution exploration and a number of excellent external speakers. The Crystal is a thrusting glass explosion of everything contemporary, and is apparently “one of the world’s most sustainable buildings" - a far cry then from the area's industrial heyday when the docks were some of the busiest in the world, and were a very visible representation of the last century's trade with it.
That deep change was something that Basware SVP, Ad Van der Poel emphasised as he opened the day’s sessions. Increased globalisation and free trade over the last 50 years have created a tight network, primed for growth. Of course, a globalised economy comes with risks, with events in one region having a direct and often immediate impact on another. And Ad pointed out that some of the tumultuous events of 2016 – Brexit, Trump - had been a direct response to that perceived threat.
And yet, according to him, despite the growth of that global network and the increase in automation over the last 10 years; of the 170bn B2G transactions annually, only 5% were eInvoices. This seemed like a particularly low figure to me, and I expect incorporates some broad geographical differences. But it's a figure which shows just how far the industry still has to go. But an even more interesting figure was that of the $40 trillion of trade between businesses globally, 57% of organisations delayed payments despite almost all of them recognising the negative commercial impact that would have. But to properly protect our networks and mitigate against risk, we really have to have a better corporate social financial responsibility than that. Organisations can't just choose the cheapest supplier, but should choose one that can help. Make sure that the small supplier that gives you that competitive edge has all the payment options available to them. We live in a world of uncertainty, so being able to effectively manage risk is vital. One of the ways organisations can do that is to leverage their data – not only can they then unlock trapped cash, but also gain insight into their business partners and identify risk areas before they become a problem.
You could say that being able to unlock trapped cash was the kind of marginal gain likely to have a big impact over the reach of a global organisation and its supply chain. But if you’re looking to innovate, is it more important to look for those marginal gains, or to go all out for the big idea? “Undercover Economist”, Tim Harford says there’s a lot to be said for combining the two approaches. Take British Cycling for example. As Tim pointed out – we dominate the sport, right? Well – yes we do – and it would seem that some of the reason for that lies in the subtle art of being able to scour the horizons for hugely important incremental gains. Matt Parker, who rejoices in the title of Head of Marginal Gains, made sure they addressed all the elements they could control – don’t take the transfer bus for fear of infections, take your own pillows, and yes – wear heated hot pants to warm the muscles!
But sometimes that’s not enough, maybe we can be too attracted by the idea of marginal gains, perhaps they’re too comfortable, too safe. Sometimes circumstances call for a radical shift – circumstances like the 1930s for example.
Before the 1930s fighting in the air was virtually unheard of and yet that didn’t stop R J Mitchell having the foresight to see how gaining the advantage in that area would give a competitive edge. But his plans were rejected as being too radical, denounced as "never going to work" by Winston Churchill, but were finally supported by Air Commander Henry Cave Brown Cave as a “most interesting experiment.” The plane in question was the Spitfire – as Tim said – an innovation that it’s not too much of an exaggeration to credit with “saviour of the free world.”
But going for the long shot, month after month with nothing to show for it in pursuit of the Grand Idea is a difficult path to navigate in business. So how do we create an environment where the triggers for innovation can thrive, especially in a changing world? You could argue, as next up on the stage Guy Allen did, that the march of the alt-right in the US and an increasingly volatile world can’t fail to have an impact on our supply chains, particularly if Trump continues on his intended path of protectionism and the implications that has for outsourcing. So it’s never been more important to recognise our own part to play in creating the right seed-bed for innovation – a procurement professional increasingly also needs to be a relationship manager, a risk manager, a tech specialist.
And these days, you can't talk about a connected business environment without including accounts payable. so I went along to hear the top AP challenges hosted by Paystream Advisor’s Jimmy LeFever and Basware’s Andrew dos Santos – interesting to hear that some of the same challenges resurface time and again, such as cost savings and efficiency – but it just shows the levels of complexity companies face in being able to combat them – particularly around fraud and risk control.
But perhaps that complexity is where the real “Big Idea” moment is going to come from in the industry. listening to Basware's Stephen Carter discuss the significance of Blockchain, it's clear that if it can be leveraged properly, it has the capacity to revolutionise how we think of P2P processing, reducing fraud, raising compliance, visibility and efficiency levels at the same time. It does feel we’re at the start of something new. If blockchain is properly supported in the industry and organisations are ready and able to use it – this really could be P2P’s Spitfire moment.